The economic crisis

Our brainless societies

Many people think that the current (it is 2011) economic crisis is caused by mis-management of our financial institutions. But that's not true.
Look, all those people in the USA that lost their houses because they no longer could pay their mortgage-interest, could easily pay their interest-bills in the preceding 10, 20, 30 years. US economy flourished (partly due to the computer-industry, hard- and software), so there was plenty of work so income, there was plenty of money too, so that money was cheap (low interest).

Then US economic growth slowly but surely came to an end. Money became scarce and therefore more expensive, the interest rate rose. And it became more and more difficult to find work; that extra job to earn your mortgage-interest with, was no longer there.
Millions of house-owners went bankrupt and had to leave their houses.

And a package of 100 million dollars of mortgage claims, from one day to another, became nearly worth-less. Those packages of mortgage claims also were marketed by the US banks, and Dutch (I am Dutch) banks too had invested in it. And also these Dutch packages of 100 million euros became worth-less from one day to another.

And indeed it showed then that these investments in mortgage claims were packed in dark packages, that even banks did not understand. But were they packed in clear packages, they also would have become worth-less of course. So mis-management was not the cause.

We have in the past 10, 20, 30 years invested on the growth, in the expectation that the economy always would continue to grow, so in the expectation that interest rates would remain low (central banks keep interest rates artificially low now; would it be left to the free market, then interest rates now would be 4, 5, 6, 7%).
Invested on the growth, that is what we did. Companies did that, but many individuals as well, by buying 'to expensive' houses, in the expectation that their income would continue to grow, in the expectation that interest rates would remain low, in the expectation as well that the house-prices would continue to rise.
If you built a house in the past for 200,000 euros of material and labour, then you could sell that house for 300,000 euros, so with 100,000 euros profit (in for example Amsterdam or The Hague). And many people now live in a house they paid 300,000 euros for, while the real value is only 200,000 euros or even less.

In our economy as a whole, there now is a huge bubble, billions of baked air (we say in Holland). That bubble deflates now, and will continue to do, I expect. That house in The Hague you paid 300,000 euros for, will be worth 200,000 euros after 5 years from now, the real value. And the over-capacity in business and industry will disappear.

In European context, especially the poorer countries (Ireland, the countries of the South) have invested very much in the past 10, 20, 30 years, with borrowed money. These poorer countries wanted to become 'modern' like Holland and Germany.
And these poorer countries therefore as first go 'bankrupt', with huge debts.

And also here, mis-management is not the cause of the crisis, the for example Greeks experience now. Years ago the Greeks had the same (mis) management, without any problem. Because they paid their interest-bills on time. 'End of growth' is the cause. And indeed, all kinds of mis-management then came to light.

But Holland will follow, I think. Our politicians and experts hope for a recovery of the steady economic growth. But that growth is over, for ever. See about that elsewhere on this website, 'End of economic growth' for example.

And I do not blame the Greeks. They borrowed a lot of money to modernize their country. But the rich European countries (banks) lent them that money. Who is to blame then?


I by the way believe in 1 big European Citizen Bank. Several European countries already have one or more state-banks now, bought out of a bankrupt a couple of years ago (the Dutch state owns ABN-AMRO for example). These state-banks already could start to work together tomorrow, so under 1 flag, the European Citizen Bank. Poor-rich relations in Europe will remain the same then; one country then has for example 100 debit and 50 credit, another country 50 debit and 100 credit; the rich country then has a claim of +50, the poor country a debt of -50. These relations, so the real ownership, remain the same then, so that the European Community as a whole can become the formal owner, the only share-holder. That Eurobank can become the source of income then for the European Community.
Private banks do not like this idea of course, will also say that it is against European anti-monopoly rules. However, these rules apply to private companies, and not to public services.

Cooperative banks (so without shareholders), like Rabobank in Holland, can easily join the Eurobank then, just by wanting it, and then still can keep their own character and name. Main bank-policy however, will become a task for the management of the new Eurobank, and main bank-policy concerns the question where to invest the savings of the European citizens (in Europe!).
For banks with share-holders, it is a different question. But many of these banks are cheap now; they have for example 100 debet and 100 credit or even 101 credit, and then the value of that bank is nihil or even negative. In other cases, share-holders must be compensated of course, partly.

Suppose, in the end, it is The bank for every European citizen and every European company. One huge cooperative bank then, owned by the members, owned by us (Europeans) all. The savings then can be spent to loans to European citizens and European companies, can also be spent in shares in for example European energy companies, European telecom companies, European public-transport companies.
The Eurobank, that is Europe then, owned by us all, in a democratic way. That Eurobank then is stable like Europe itself.

The more I think about it, the more I like this simple idea, and it also easily can be done. I really do not see any objection. USA can do the same of course, 1 cooperative USA citizen-bank.
Liberal Communism actually.

Jan Helderman, 2 - 16 September 2011

Our brainless societies
The Relational View.

A society is like an organism. And an organism not only consists of parts (organs) but also contains, when living, an immaterial force or spirit of life. And though this Life is everywhere in your body, there also is a center of Life in you: your Brain. Destroying your brain means killing you, as a person at least.
A society also needs such a strong brain, a strong public service, including a government. Western societies however are more and more destroying their brains, their public services. They make it private business more and more.
As if in your body, your left leg lives a life independent from your right leg, independent from your arms, your eyes, your ears, even your heart. The brains in modern Western societies are company-brains, university-brains, so private brains, with the government as only book-keeper.

Our brainless societies must get Brains again, strong public services, everywhere where our desires are the same, and of course in a democratic way.
Traditional communism was about public property and public service. I am pleading for public service and private property. But sometimes, public service demands public property as well, roads for example and other networks. This public property then is like an instrument, a tool, a common tool. I am pleading for Commonism.

Public services are the nerves and veins of a society. Every body meets every body else there, and on the same level, because we all have the same basic needs: education, medical and other care, safety, some basic social security, connections, transport, energy, electricity, water, communication, and even banking. Then we see civil-servants 'everywhere', not sitting behind desks but doing all kinds of practical and useful work. Then our governments learn to know their societies again. Then disabled people can have useful civil-servant jobs. Then we feel members again. It also can be the cheapest way.

Jan Helderman, 18-22 July 2011